We know downtime is costly. According to Gartner, downtime can cost as much as $5,600 a minute, which sounds terrifying, but how much does it really cost for you and your specific situation? There are dozens of downtime calculators online, but they’re typically too simple. Really, they’re marketing tools to help illustrate the cost of downtime generally, but they’re not business tools for calculating your or your client’s real costs. Every situation is different because of many variables, but if you want the real number, you have to do some math to find it.

Before we begin, it’s worth noting that there are dozens, even hundreds of variables that affect the cost of downtime, and many of them aren’t so easily quantified. We can attempt to arrive at a solid number, but the cost of downtime depends on the type of business, the event that causes downtime, and indirect costs, which we’ll explore later.

Estimated Labor Cost Per Hour

The costs that are easiest to tally relate to labor. Any time employees are not completing work, the company is paying them to perform at a lower level. To get to the estimated labor cost per hour, you need to know:

Number of employees

Average employee wage per hour

Average percentage of lost productivity (What percentage of employees are affected by downtime? Some? All? Choose a percentage that’s closest.)

With that information, use this formula to find your estimated labor cost per hour:

(number of employees * Average employee wage per hour) * Average % of lost productivity = Total labor cost per hour.

Estimated Revenue Loss Per Hour

Next, you’ll need to determine how much revenue you lose per hour of downtime. Understand that this formula gives you an idea of how much revenue a company could lose per hour, but it’s the highest possible percentage. If a company suffers downtime, that doesn’t always mean it loses 100 percent of the revenue over the course of the downtime. For example, if someone visits a web store for a product but the site is down, they may go to a competitor, but they could also come back later. You may wish to take the total from this section, and multiply it by a percentage of lost revenue to get a more accurate picture for your business. In any case, here’s the data you need:

Gross annual revenue

Days per year open for business

Hours per day open for business

With that information, use this formula to find your estimated revenue loss per hour.

((Gross annual revenue / days per year open) / hours per day open for business) = Estimated revenue loss per hour.

Estimated Hourly Downtime Cost

Next, you’ll add the totals from the previous two sections to get the total hourly downtime cost. Use this formula:

Duration of Downtime

Now that you know what an hour of downtime can cost, you can multiply that by the number of hours downtime lasts to get the total downtime cost. Downtime events can be brief, but depending on the cause of downtime, they can last hours – sometimes days or weeks. As the hours add up, so does the lost revenue and wasted labor time. Many businesses are satisfied understanding only the cost of downtime per hour, but there’s one more category worth thinking about: indirect costs.

Indirect Costs

Indirect costs are tied to revenue, but aren’t as easy to measure with hard figures. However, they can be more crippling than the loss of revenue itself. Indirect costs add up quickly and can prevent a lot of downstream work getting done. They can even send your company on a downward spiral. Here are the biggest indirect costs to consider:

Loss of reputation. If systems go down at the wrong time, you can’t meet your commitments. This can lead you to losing clients you have, and can even prevent you from finding new ones.

Loss of opportunity. What did you miss while you were down? Did a big potential client try to visit your website but couldn’t access it? Will they come back to you or did they already make a deal with a competitor? Did a huge deal fall through because your cloud platform broke during a key presentation? These are problems downtime causes.

Re-doing work. Downtime is often coupled with data loss. If data loss causes work to disappear, someone often must do that work again, which slows your business down and costs you opportunities and workforce hours.

Conclusion

It’s easy to see how a few hours of downtime can cause thousands of dollars in loss, and how that cost coupled with indirect costs can put a business in the ground. Backup and disaster recovery solutions that prevent downtime pay for themselves quickly. Investing in these tools is less a costly burden and more a form of insurance. Make sure your business stays hale and hearty for years to come by taking the time to evaluate these costs and how much you can invest in downtime prevention.

I'm glad you asked! I believe your company is in New Zealand, is that correct? You'll probably want to contact our sales team in Australia at sales[at]storagecraft.com.au or call +61 2 8061 4444. If you are interested in signing up in the United States or Canada, you can either submit an inquiry here: http://www.storagecraft.com/shadow-protect-msp.php or contact our sales team directly at 801.545.4700 or via email at sales[at]storagecraft.com.

Yes, we believe this is great news that StorageCraft will be releasing a CrossPlatform version of ShadowProtect which supports both the Windows and Linux platforms. We're very excited about this news.

The current release of the ShadowProtect Recovery Environment - CrossPlatform is a positive step towards supporting the Linux OS. Currently this CrossPlatform Recovery Environment is intended only for backing up and recovering Windows OS systems (including Windows 8 and Server 2012). Another release will have the complete tools for backing up and recovering both Linux and Windows systems. I can tell you that this later release will be out before the end of the year. Until then, thank you for your kind comments and we we're looking forward to providing you with more information about this exciting update in the near future. Check back with us again soon.

Thanks, Casey. This was a really interesting take on the NSA's new local data center. Despite the privacy concerns, I'm excited to see what this means for the state. Silicon Slopes is definitely filling up with some great names!

Wow is this for real? You cover how easily a host can get a virus and how the tech runs at the base level?

Has a vmware host ever gotten hacked or got a virus?

Has a windows computer ever gotten hacked or got a virus?

I almost spit out my water when I read the part about Hyper V and stability. We have both Hyper V (2008 R2/2012) and VMware. Some REAL facts.

* We have gone over a year on some of our vmware clusters with out patching or rebooting a host. NONE of our Hyper V hosts have reached 90 days.

* Install and setup of a clustered Hyper V host takes about 10 times longer than a clustered VMware host.

* Upgrading a Hyper V cluster....IS NOT POSSIBLE. You cant have two versions in the same cluster so you must build a new cluster and migrate the VM's over. The migration requires downtime for all VM's on a SAN volume. Ugrading a typical 8 node VMware cluster takes about 90min as upgrade the hosts one at a time and reboot them. (VMware supports mixed versions on a cluster.)

* Many functions in Hyper V are POWERSHELL only. For instance you cant mass upgrade the "VM additions" in SCVMM unless a guest is off. In VMware you can highlight 50 (or more) running VM's and update the vm tools. It requires a reboot but the effort is 10x easier to complete.

* We have NEVER had a VMware host go down, at all, not once. We have had MANY hyper v hosts drop all of their VM's for many different reasons. 99% of the time its YET ANOTHER hotfix you cant get from Windows update, to fix a storeport driver, or a MPIO issue, or a failover cluster issue. There is NO WAY we would run our production servers on Hyper V.

* Drivers....for Hyper V you can get them from your hardware vendor (Dell, HP, etc) or Microsoft, or right from say Intel or Broadcom. Often MS Premiere support will tell us to go to the NIC drivers sight and get the driver vs the Microsoft driver or the Dell driver when we have a problem. VMware.....gives you the ONLY drivers you need. Yes they re-package the vendor drivers but you get them from one source, they are tested and supported.

A real comparison is not a technical white paper, its in the trench usage of these products.

Casey, congratulations on this blog post -- I could not agree more. I am the editor of the Varnex Insider magazine, and would like to talk with you about the possibility of publishing this blog in our next issue (with full credit to you and StorageCraft, of course). Please email me at the address I provided so we can talk about this. Thanks very much. -- John

Another win-win with image-based backups which ShadowProtect delivers is the ability to take a full "base image" backup and then "incremental" backups which only capture the changes that have occurred -- greatly reducing the storage requirements for image-based backups.

Then with ImageManager, you can consolidate the image chain over time, set retention policies and even take advantage of the new rolling consolidation feature in ImageManager 6.